Sandwiched between Germany, France, and Belgium, the tiny country of Luxembourg is one of Europe’s smallest, but also its wealthiest — its residents enjoy the second-highest per capita income in the world.

Key to this success is its thriving financial services sector which has helped draw several big names to the Grand Duchy, including the European Investment Bank and Amazon. It’s no surprise then that fintech has been identified as the tech sector with the greatest growth potential in the region. 

Luxembourg was also one of the world’s biggest investors in AI per capita in 2021, surpassed only by Israel, the US, and Sweden (in that order). The National Research Fund has allocated €200mn to AI research projects over the past five years. To help power these advancements is Meluxina, one of Europe’s most powerful supercomputers.  

While only home to 600,000 people, Luxembourg’s thriving economy, modern infrastructure, international workforce, and generous government grants, which cover up to 80% of R&D costs, allow it to punch above its weight as a hub for emerging tech startups.   

Well-known success stories include social media analytics and monitoring tool Talkwalker, and online jobs board JobToday. OCSiAI, a producer of graphene nanotubes, made headlines in 2019 when it joined Europe’s growing list of tech unicorns.  

an image of the house of startups in Luxembourg
Located in downtown Luxembourg City, House of Startups is the epicentre of the country’s tech ecosystem. Credit: House of Startups
an image of the house of startups in Luxembourg

“Although Luxembourg is a small country, it shares its borders with two of Europe’s biggest economies,” pointed out Kenneth Graham, CEO of Tomorrowstreet, a Luxembourg-based innovation centre that focuses on scaling late-stage deep tech startups.  

“Half the population come from somewhere else and many have connections with people all over the world, including Silicon Valley and the UK. This diversity of thought really makes the country a special place to do business,” he said. 

Almost 50% of Luxembourg’s workforce commute from neighbouring countries, and 80% of the population speaks English.

A 2022 report from Startup Genome found that startup funding deals in Luxembourg increased five-fold between 2012 and 2021. Notably, the availability of seed funding in the country is considerably higher when compared to peers with similar-sized economies. Although it performs worse when it comes to later-stage investments.

This growth is undoubtedly partly thanks to the emergence of multiple startup initiatives in recent years, such as the government-backed Fit4Star program. Another is House of Startups, a place where incubators, accelerators, investors, and startups are all housed under one roof in the downtown Gare district of Luxembourg City. Funded by the Chamber of Commerce, the centre houses a whopping 200 of the country’s 521 tech startups.  

All of this puts Luxembourg’s tech ecosystem on track to continue its upward growth trajectory in coming years, not just in fintech but also SaaS, climatetech, spacetech, and manufacturing.

Five startups to watch  

1. Circu Li-ion

Founded just two years ago, this climatetech startup has developed an automated upcycling solution that enables the sustainable recycling of lithium-ion cells for reuse at scale. Last month, the company raised €8.5mn in seed funding.

Circu Li-ion’s services come at an opportune moment for the company (and the planet), following the EU’s new battery regulation, which aims to ensure a circular economy and will require mandatory minimum levels of recycled elements for EV batteries.  

2. Salonkee 

Founded in 2016, Salonkee has developed an online reservation platform to streamline the booking of hair or beauty appointments. The startup has raised €35mn so far and is already profitable. It currently has 110 employees across offices in Luxembourg, Belgium, Switzerland, Germany and the Netherlands. 

3. Next Gate Tech

Next Gate Tech is a data-driven fintech that provides SaaS solutions for the asset management industry. Basically, it helps banks and the like automate the boring and repetitive aspects of data management (I thought it was all boring!). Since launching in 2020, the startup has raised €17mn, and is valued at close to €50mn, according to data from Dealroom.

4. OQ Tech

This spacetech startup has developed a constellation of satellites that allow IoT devices on Earth to stay connected even when there is no cellphone reception. It can also support bi-directional communication to machines such as banking ATMs in poor connectivity areas. Five of the company’s satellites are already in orbit. Oil and gas giant Saudi Aramco is OQ Tech’s largest customer and invested €13mn into the startup last year.  

5. nZero

Last but not least is nZero, a carbon management platform that gives NGOs, government agencies, and organisations accurate data on their carbon emissions. It offers insights across all three emissions scopes, including embodied carbon which is often left out from many carbon calculating tools. So far the company has raised €15mn and racked in almost €8mn in revenues last year. 

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